Planning a Dental or Medical Office Sale? 4 tips for smooth sale

It’s a fairly common pattern. Finish medical or dental school. Work for someone, but then realize that running your own office is the way to go. You start from scratch, or buy an existing practice, and then spend years serving the community to build a steady, loyal base of patients. You then watch your young patients grow up, and start families of their own.

Once you’re ready to sell your practice (whether it’s due to a move, retirement or any other reason), you should start planning for the sale right away. A Dental or Medical Office sale should be an easy process, right? It’s not easy, and the complexity of the process should not be underestimated, even if you sell to your partner or someone else you know.

Here are 4 tips to help you navigate a sale:

1. Gather your financial statements and documents

As a dentist or physician, you probably have a very robust financial history. Receipts for equipment. Cash flow and Income statements. Balance sheets. Tax documents. All of this paperwork will paint a picture of a growing, stable (or struggling) business for potential buyers. Ideally, you’ll want to show opportunity for a new buyer through a steady stream of income from a steady stream of patients. If your business is cyclical, make sure your potential buyer knows this. Ultimately, if your dental or medical practice is not in the best financial shape, you may need to sell for a lower price. Seek multiple bidders to improve your chances of getting the best price for your office.

2. Take inventory of your equipment

How much does a basic, older dental chair cost compared to a modern chair with all the bells and whistles? What about an exam table, an EKG machine, or a laboratory-grade refrigerator? Chronicle everything in your office that you plan to sell, from the waiting room chairs to printers, and use receipts and appraisals to determine the value of tangible property. As is standard, expect to reduce the price of equipment that has a limited lifespan like computers, printers, and other electronics, more than you would for other items, like waiting room tables or office desks.

3. Make arrangements to retain and store records

In a physician or dentist’s perfect world, each patient signs an authorization to transfer or forward records with clear, concise directions on where those records need to go. Unfortunately, some patients may not be around to sign this authorization form, leaving a considerable amount of records in limbo, but still in your custody. Even though laws vary by state on how long you’ll need to store those records, or even where you can store them, at a minimum, you’ll need to find a secure, sufficient place to either a) keep the records until patients sign an authorization form, or b) keep the records until you’re legally permitted to destroy them. The Health Insurance Portability and Accountability Act (HIPAA) should give you guidance regarding patient records.

4. Forget your overpriced broker, and use an experienced attorney to manage your sale.

Many medical and dental professionals automatically assume that you need a broker for a Dental or Medical Office Sale. While many brokers specialize in finding buyers for these types of businesses, dentists and doctors are often unaware that using a broker can cost much more in fees than having an attorney arrange their sale. In a transaction, brokers and attorneys play different roles. While the broker might help find you a buyer, a knowledgeable medical and/or dental attorney can help with buyer sourcing as well. More importantly, no one is better equipped than an attorney to help you negotiate the sale price, and deal terms, and ultimately finalize the transaction.

Just like a homeowner struggling to sell the house where their children grew up, you might have an emotional attachment to your dental or medical office. That’s why it’s all the more important that you consider using an attorney, rather than just a broker because any way you approach it, Dental and Medical Office Sales are complex multi-step transactions with serious tax implications that are very difficult to navigate without an experienced Medical or Dental Attorney. In fact, this niche transaction spans multiple areas of law that require intricate knowledge, strategic thinking, proper documents, and an understanding of the specific challenges ahead.

Here are just some of the involved tasks:

Protect your interests
Attempt to get you the best return on your investment
Identify serious buyers specifically interested in an office with your metrics and demographics
Review and draft documents, including sales, lease, and title documents
Conduct escrow, including full documentation thereof
Help you develop a plan to transfer receivables, payables, and intellectual property

At Vaksman Khalfin, our team approaches each Dental or Medical Office Sale based on the individual situation. In fact, we know this area of law because we’ve lived in it. Robert Vaksman, our firm’s founding partner, has numerous physicians and dentists in his family, and he is married to a respected South San Francisco dentist. Robert has over a decade of experience working within the legal and operational framework of medical offices, including the purchase and sale of medical practices. But he isn’t alone. Vaksman Khalfin has a team of attorneys with significant and varied experience, who are prepared to assist your business.

By following our 4 tips for your Dental or Medical Office Sale, you’ll have a much better chance of a smooth and prosperous transaction.